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Red Bull and the Richest Man in Austria

According to the Forbes annual tally, there were seven billionaires in Austria in 2016. (Only one of them female.) Dietrich “Didi” Mateschitz (b. 1944) is at the top of that list – the wealthiest person in Austria.

So how did Herr Mateschitz amass his estimated $15.4 billion fortune (as of April 2017)? Perhaps you’ve heard of the energy drink known as Red Bull? Red Bull’s world headquarters are located in the tiny town of Fuschl am See (population 1,500) near Salzburg, Austria. All those drink cans are filled at plants in Austria and Switzerland. Mr. Mateschitz is the co-founder of Red Bull, which sold its first drink can in Austria in 1987. Today Red Bull sells its drinks in about 165 countries, pretty much all over the world.

If you don’t happen to live in Austria, you have probably never heard of the Austrian billionaire Dietrich Mateschitz. Despite his wealth (64th out of all the billionaires in the world in 2016), “Didi” is not as well known as super billionaire Bill Gates ($88 B), the world’s richest person (2017). Even the Austrian-born Hollywood celebrity chef and restauranteur Wolfgang Puck, worth a paltry $75 million, is far better known than Dietrich Mateschitz. And few of the many people who consume Red Bull are aware that it is the product of an Austrian company.

The story of Red Bull’s origins is an interesting one. During a business trip to Thailand in 1982, Mateschitz discovered a Thai energy drink named Krating Daeng that helped him overcome his jet lag. Created by Thai businessman Chaleo Yoovidhya in 1976, the Krating Daeng drink was sold in bottles bearing an image of two red bulls on the label. (In Thai daeng means red, and krating is a reddish-brown bull-like animal called a “gaur.”) In 1984 Mateschitz partnered with Yoovidhya to create an Austrian company to introduce a modified version of the Thai beverage to the European market. The ingredients were modified to suit western tastes, and the first Red Bull canned drinks went on sale in Austria in 1987. Yoovidhya provided the drink’s formula, while Mateschitz was to handle the marketing (“Red Bull gives you wings”) and the actual day-to-day running of the firm. The two partners each chipped in $500,000 for equal 49 percent shares in the new Red Bull company, with Yoovidhya’s son, Chalerm, holding the remaining two percent (in a trust). Following the death of Chaleo Yoovidhya in Bangkok at the age of 90 (on March 17, 2012), the Yoovidhya family now holds 51 percent of the company.

Besides reducing the sweetness of the original Thai beverage, carbonation was added for the new Red Bull drink. The ingredients in a can of Red Bull also vary slightly from one country to the next, based on the food-safety laws (or lack thereof) in each of the 165 countries where Red Bull is sold. An examination of the ingredients label in the US shows artificial coloring and flavors, while the label in Germany indicates natural colors and flavors.

The Red Bull brand expanded in Europe during the early 1990s, and entered the United States market in 1997, soon gaining 75 percent of the American energy drink sector. In the process Red Bull also gained some criticism related to its marketing tactics using extreme sports, and its health risks. However, the European Food Safety Authority (EFSA) and similar agencies in other parts of the world have ruled that the levels of caffeine, taurine and glucuronolactone used in Red Bull and competing energy drinks are safe. (The French food safety agency blocked the sale of Red Bull in France until 2008, finally relenting on its objections to taurine under EU pressure.)

One reason Mateschitz is so little known is that, unlike his brand, he tends to stay out of the spotlight and rarely grants interviews. His company is also privately held, so it is not required to reveal information that a publicly held corporation must disclose. The company allows its various country divisions to do what they think is best for their own market. According to Forbes, “Red Bull Canada, for instance, is more heavily involved in music (it aims to be a music producer) and arts … than most other country operations.” In the UK, Red Bull has “…tried to launch new products such as Simply Cola and Carpe Diem, a herbal drink. While these efforts haven’t achieved much in the way of business success – something that may be considered as an issue – the important point is that the freedom to pursue new strategies reinforces the freewheeling culture.”

Red Bull has very successfully used an advertising strategy with an emphasis on “buzz” or “viral” marketing and word-of-mouth. It sponsors NASCAR and Formula One racing teams, sports teams, plus other events, including the odd “Flugtag.” In a recent rare interview, Mateschitz talked about how Red Bull is trying to also become a media company – with the side benefit of spreading the company’s brand. As Red Bull faces increasing competition, it must also find new ways to market its brand. With a background in marketing from his old German toothpaste days, Didi is well suited to the task. From the beginning, he has had a unique approach that he clarified in another interview: “We did not bring the product to the people, we brought the people to the product.”

Not bad for a man of humble Croatian background who was born in the small Austrian town of Sankt Marein im Mürztal, Styria, and took ten years to earn a marketing degree from a Vienna university. Later, when his marketing advisers questioned the wisdom of even going to market with his new drink, he ignored them and did it anyway, creating a market that didn’t even exist before 1987. As a licensed pilot, Mateschitz didn’t need Red Bull to give him wings, but he has definitely created a high-flying company.

– HF

Books:
There is only one book about Mateschitz and Red Bull that I know of, and it’s in German: Die Red-Bull-Story. Der unglaubliche Erfolg des Dietrich Mateschitz by Wolfgang Fürweger. This book is available from Amazon.com and Amazon.de in paperback, hardcover or Kindle (Amazon.de only) editions.

About HF

Born in New Mexico USA. Grew up in Calif., N.C., Florida. Tulane and U. of Nev. Reno. Taught German for 28 years. Lived in Berlin twice (2011, 2007-2008). Extensive travel in Austria, Germany, Switzerland, much of Europe, and Mexico. Book author and publisher - with expat interests.